Slowly, one by one: Nexon is the first Japanese company to jump on the trend of shifting parts of its cash reserves into Bitcoins. At the gaming company, a strategy behind the investment is becoming apparent.
Originally a Korean developer studio, Nexon may be one of the fastest-growing companies in gaming. It focused early on the “free to play, pay to win” business model and games for tablets and smartphones.
While Nexon’s games are little known among “classic” gamers, the company successfully went public in Tokyo in 2011. Thanks to annual sales of more than $2 billion and investor capital, Nexon was even able to make a takeover bid to the well-known gaming developer Electronic Arts a year later.
Now Nexon is becoming the first “bitcoin treasure trove” among Japan’s publicly traded companies. The company announces it has purchased 1,717 Bitcoins worth the equivalent of about 11.1 billion yen — about $100 million. According to the press release, this expenditure represented less than two percent of its liquid cash and cash-like reserves. Clearly, Nexon is not short of cash.
What it does lack, however, is apparently confidence in the stability of fiat money. “Our purchase of Bitcoin reflects our disciplined strategy,” CEO Owen Mahoney politely puts it, “to protect shareholder value and preserve the purchasing power of our cash assets.” In the current economic environment, Bitcoin offers long-term stability and liquidity while preserving the value of cash for future investments, he said.
The press release ends with these terse but saying words. Nexon, you should probably know, began a buying spree in the entertainment market last year. The company is investing $1.5 billion of its lavish surplus funds in other companies in the industry, such as Monopoly publisher Hasbro and Sega Holding, which is legendary in gaming. Such investments rely on having large amounts of cash available quickly and preserving the value of the capital. With its combination of great liquidity on exchanges and potential to preserve value even during fiat inflation, Bitcoin seems like a sensible and useful option given these needs.
It should be no coincidence that SynBiotic, the first German non-crypto company to hold cash reserves in Bitcoin, is also investing heavily in other companies. Would it be possible that Bitcoin is about to find a new “killer app”? As cash for investment companies?
The $100 million that Nexon is shifting around sounds like a lot — but it’s little relative to the cash the company holds overall. As written, they account for only two percent. Bitcoin is still just gaining the confidence of businesses, nor are they just beginning to dip their toes in the water.
In a much smaller purchase, another publicly-traded company is expanding its bet in crypto: Mogo, a Canadian Nasdaq-traded payment processor that works primarily with high-interest loans and mortgages. Mogo had previously purchased 18 Bitcoins at $33,000 each, according to the press release. Now the company is adding 146 Ether at a unit price of $2,780. This brings its cryptocurrency holdings to about $1.5 million.
These purchases would be in line with the company’s plan to exchange five percent of its “cash and investment portfolio” for cryptocurrencies. Like Nexon and SynBiotic, Mogo is currently buying into other companies. It also focuses on the crypto space, such as by acquiring 19.99 percent of the Canadian exchange platform Coinsquare.
However, with the crypto investment, the company is expressing less concern about fiat devaluation than a “belief in the long-term potential of blockchain technology and its position as a core component of next-generation financial platforms,” according to a press release from CFO Greg Feller.
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